Modern Insurance| Brief History

          Brief History of Modern Insurance

The gaze for the introduction of the present-day insurance business in Nigeria was anchored on the very role of British trading companies in 1879.

Modern insurance business, however, was introduced to enable the European traders who traded on the west coast of Africa to freely run their business with aim of actualizing their daily business objectives.

All these European traders brought finished goods to Nigeria and in exchange made away with raw materials such as cocoa, groundnut, tins, coals, palm kernels, cashew nuts, and so on for which they required some form of insurance against the perils of the sea, and other fortuitous events.

Having injected much strength in actualizing this need, the British insurance firms have to send their agents to Nigeria to issue cover notes to these traders while making proper preparation for the actual documents by the parent companies in England.

Meanwhile, only a few agencies were operating in Nigeria as of then and the very opportune few Nigerians that were employed by these agencies had zero knowledge of what insurance practice is all about due to lack of exposure to the practice of insurance.

These activities of the European traders are melted on the classical definitions of insurance which pointed to insurance as a social or commercial device providing financial compensation or support for the effect of misfortune, and the payments being made from the accumulated contributions of all parties participating in the scheme.

Other Forms of Insurance business that existed before the modern-day insurance

Earlier before the genesis of the modern-day insurance business in Nigeria, other forms of insurance have been in practice that provides assistance or help to the masses by spreading the existing risk thereby minimizing the individual losses. This insurance can be referred to as TRADITIONAL SOCIAL INSURANCE SCHEMES. Among them includes

a. Social club

b. Age grade

c. Extended family structures

d. Akawo

e. Esusu contribution

f. Kingsmen sting contributions

All the above-listed forms of communal contributions acted as the only device for providing financial support to the victims of fire accidents, floods, windstorms, communal clashes, and other unexpected losses. As of then this form of insurance is regarded as ” United Brothers Fraternity.”

The modern business of insurance in Nigeria has grown beyond the egocentric interest of the people to include other areas of risk exposure. Nigeria now has considerable agency involvement in both local and international trades. This, with increasing urbanization, industrialization, science, and technology was (and still) positively encouraged to assimilate the modern insurance business as better substitutes for the crude forms of insurance practiced before the modern insurance.

Following the positive development in the Nigerian insurance industry, in 1921, an insurance company was established and indigenous insurance companies were subsequently established. National Corporation of Nigeria and Nigerian Reinsurance Corporation were established in 1969 and 1977 respectively but give way in 1978.

These are also progressing enhancement and establishment of various insurance associations and training facilities as well as regulations and supervisions. By 1997, insurance dynamic supervision/regulation (National Insurance Commission) there existed about 136 registered insurers and 5 professional reinsurance, 480 registered insurance brokers, and many other registered insurance agents operating in Nigeria’s insurance market as well as about 30 loss adjusting companies referred to as “Loss Adjusters companies.”

All these development facilitated the formulation of insurance decrees and various associations and other regulatory bodies to monitor the activities of insurance companies. The insurance decree of 1976, the degree of 1991, the insurance decree of 1988 called “40” and the insurance decree of 1997, and this most current insurance Act 2003 which increase the amount of statutory registration of insurance companies to companies 360,000,000 Life, 300,000,00 and General or Non-Life policies 160,000,000.

Features of insurance development in Nigeria 

Insurance business emanated as people begin to own property, the need to safe-guide those properties in case of any misfortune caused by either fire, flood, earthquake, Accident, and many other incidents become the pressing need of man. However, the following are the very feature of modern insurance.

1. Each of the insurance started as a specialist insurance companies

2. The establishment of various forms of insurance was propelled by measures of government supervision.

3. Each class of insurance developed in response to the demand for protection. Anybody who acquired a motor vehicle will try to protect it.

4. From specialist insurance companies majoring in one class of insurance to composite insurance companies transacting both life assurance policies and non-life policies.

Finally

The existence of the modern insurance business has defined a means for allocating or sharing the accumulated premium by the insurance companies, Hence reducing the crude exposure of traditional social insurance schemes in premium distribution.

However, insurance is an activity whereby losses are shared by many, rather than heavily upon a few.